The capacity for drugs to warp the mind is boundless. Two years ago, the Conservative government was properly derided by the left for granting multinational drug companies sweeping monopoly rights in a dubious attempt to attract pharmaceutical research and development to Canada.

Now it seems some have fallen victim to the same obsession in the matter of Connaught BioSciences Inc., screeching for the government to block any and all foreign takeover bids for the company - again, in the name of preserving R & D in Canada.

There are some respectable grounds for concern about a bid for Connaught, as there are for any takeover, foreign or not. For example, in the course of his many contributions on the subject, The Financial Post Editor John Godfrey has looked for one that will fit. Is the deal good value for shareholders? The original bid from France's Institut Merieux, a complicated swap for shares in a Dutch holding company, left this in doubt. But the arrival of Switzerland's Ciba-Geigy offering a readily understandable $30 a share in cash, and Merieux's counterbid of $37, put this concern to rest.

Godfrey has also fretted over the intentions of the French government, which controls Merieux. ''It is inconceivable,'' he wrote recently, ''that a company controlled by the French government would allow major breakthroughs in the bioscience field to be developed in Canada rather than in France.''

JUSTIFIED INTERVENTION

Intervention could thus perhaps be justified, not to prevent market forces from operating in the allocation of R & D, but to ensure that they did. But Connaught shareholders could do the same, if official French meddling were likely to harm profits, simply by going with Ciba, which may offer more anyway.

In a column which might have been written by Mel Hurtig, Godfrey also declared that ''if Connaught falls into foreign hands,'' it should cause thoughtful supporters of the free trade agreement to question ''the ability of Canadian business to take on the world.''

Now, no one I am aware of seriously thinks Connaught can go it alone. The company is isolated, under-capitalized and desperate for new products, in an industry of innovative global giants. And no one aside from the Toronto Star's David Crane has suggested Connaught should be nationalized again, having only just been sold off by Canada Development Corp. That leaves the Canadian private sector as the only alternative. And they're not biting.

To the nationalist school, if private investors will not support a venture it is proof in itself of the need for state intervention. After all, Godfrey tells us, Connaught competes in the ''crucial'' industry of bio-technology, one of four ''vital'' high-tech sectors ''identified by the federal ministry of Science & Technology as critical for our industrial future.'' Are they? How do we know? Fool!  How can you ask such a question!  They've been identified. The government must therefore sit down with business in a spirit of co-operation and ''bang heads'' until an all-Canadian offer emerges.

Bio-technology may or may not be the industry of the future. The judgment of professional investors of this possibility, I would suggest, is at least as good as the ''techno-aesthetic intuition,'' in the economist David Henderson's phrase, of the boffins at Science & Technology or those opposed to a market solution. That the market contradicts the divine wisdom of the latter group is proof of nothing except a difference of opinion. It is not, as Godfrey seems to think, an example of market failure.

Whatever the industry's fate, Connaught is in no sense at the leading edge. The vaccine technology that has everyone excited uses recombinant DNA to create proteins custom-designed to activate the body's defences against disease.

Connaught, by comparison, is still pulling pus from boils. The only thing it has to offer buyers is its North American sales and distribution network, which is what the Europeans are after.

In any case, it is more than little outdated to think of firms in any industry, let alone pharmaceuticals, in national terms. Ontario Premier David Peterson warned not too long ago against allowing our ''high-tech jewels,'' like Northern Telecom, to fall into foreign hands. With 60% of its business and most of its employees in the U.S., Northern Telecom already is a foreign company.